Councillor Phil Broadhead is Chairman of the Conservative Councillors’ Association.
It’s pretty safe to say that the new Labour Government’s first Budget has unravelled at astronomical speed. Not a day goes by without some vital section of the British economy reeling at the impacts of the punitive, tax-riddled plans. Farmers threatening a national strike, senior business groups warning of mass layoffs and weaker growth, and everything from the care sector to Councils in meltdown over the combined pain of NI increases and budget busting NLW hikes. And that’s not even touching on those freezing pensioners denied their winter fuel allowance or bus commuters now shouldering a 50 per cent increase in their fares.
But one of major changes which has escaped much of the headlines is even more concerning – and could herald the hastened death of our troubled high streets.
I’m talking about the changes to Non-Domestic Rates – or Business Rates to use their less flashy term – changes to which will be voted on this Wednesday in Parliament.
Labour have announced that, as part of this Bill, they will be cutting the rates relief discount from 75 per cent to 40 per cent next year – which amounts to a dramatic tax hike for the retail, hospitality and leisure sectors, on top of the National Insurance contributions. What’s worse, from 2026, there is a further back door tax hike as central funding for the relief is cut off completely, robbing Peter to pay Paul by taxing other firms to pay for it – including larger shops.
So, what will these changes mean in practice for many of these businesses?
Quite simply, it could spell the final straw for many, especially those in our town centres, leaving an already gap-toothed high street all gums. This stealth Business Rates increase will see businesses having to pay more than £925 million in added rates for next year alone. For the following year, the complete withdrawal of the relief coupled with the new multipliers will see a backdoor tax hike of an additional £2.7 billion.
These figures are eyewatering, and it doesn’t take a seasoned economist (or even a “retail banking specialist”) to see that that this will have a profound impact on many businesses.
In Government, the Conservatives recognised that our high streets, which are going through a dramatic change, needed support. That’s why we cut business rates, saving an average shop £1,650, increased the frequency of business rate revaluations, meaning those businesses with falling property values would see their bills drop sooner, and prioritised investment into our high streets through our Levelling Up Funds and Future High Street funds – pumping £4.8 billion and £830 million respectively.
These new plans from Labour risk throwing all of that hard work away. John Lewis’ chief Nish Kankiwala has warned that these plans alongside the employers’ NI increases are a “two-handed grab” to UK businesses. Colliers have warned that the eroding of the rate relief will see “business rates bills actually rise by a massive 140 per cent next year”. And Savills’ head of rating David Parker said that “The need to assist smaller businesses is undoubtably acute” and the reduction of the rate relief will “disappoint many”.
And this is just the tip of the iceberg. High street businesses are being hit from all angles. The refusal of Government to fully compensate Councils for the financial impacts of the NI and NLW increases are putting further pressure on Council budgets, estimated to be over £1 billion according to analysis from the cross-party Local Government Association. Councils are already stretched financially, with limited means of raising additional funds.
The easiest way for them to balance the books? Increasing car park charges for Council owned car parks, which cover the significant majority of the town centre offer. In conversations I’ve been having in my role as Leader of Local Government for the Conservatives, almost every main Council I’ve spoken to have admitted to having to ratchet up these charges even further as part of the coming year’s budget setting. At precisely the time that we need to be finding ways to encourage shoppers to our high street shops, we’re making it more expensive for them to visit them.
It’s time for a concerted, wholistic vision for how we support our high streets through this period of change. No one denies that the future of our town centres will be different to the past. The rise and convenience of online shopping has forced a change in the offer. Visits to these places are now no longer about the bread-and-butter utility of day to day shopping, but now as much about experience, leisure and social interaction. Where’s the thinking happening of how we can foster and support that change? The very changes that could breathe new life into these vital areas and bring in new investment (and tax income) to boot.
Instead, once again, it seems that our hard-working high streets are being milked as limitless cash cows – with no thought at all as to their survival. And that’s immensely sad, as once the high street is gone, it’s gone. Pressure will pile on to convert empty shops and units into homes, which carry much higher property values. Town centres will lose their purpose and meaning.
The virtual high street may be cheaper, but the physical one has character and life. And unlike the digital world, once you turn it off, there’s no reboot button.
Councillor Phil Broadhead is Chairman of the Conservative Councillors’ Association.
It’s pretty safe to say that the new Labour Government’s first Budget has unravelled at astronomical speed. Not a day goes by without some vital section of the British economy reeling at the impacts of the punitive, tax-riddled plans. Farmers threatening a national strike, senior business groups warning of mass layoffs and weaker growth, and everything from the care sector to Councils in meltdown over the combined pain of NI increases and budget busting NLW hikes. And that’s not even touching on those freezing pensioners denied their winter fuel allowance or bus commuters now shouldering a 50 per cent increase in their fares.
But one of major changes which has escaped much of the headlines is even more concerning – and could herald the hastened death of our troubled high streets.
I’m talking about the changes to Non-Domestic Rates – or Business Rates to use their less flashy term – changes to which will be voted on this Wednesday in Parliament.
Labour have announced that, as part of this Bill, they will be cutting the rates relief discount from 75 per cent to 40 per cent next year – which amounts to a dramatic tax hike for the retail, hospitality and leisure sectors, on top of the National Insurance contributions. What’s worse, from 2026, there is a further back door tax hike as central funding for the relief is cut off completely, robbing Peter to pay Paul by taxing other firms to pay for it – including larger shops.
So, what will these changes mean in practice for many of these businesses?
Quite simply, it could spell the final straw for many, especially those in our town centres, leaving an already gap-toothed high street all gums. This stealth Business Rates increase will see businesses having to pay more than £925 million in added rates for next year alone. For the following year, the complete withdrawal of the relief coupled with the new multipliers will see a backdoor tax hike of an additional £2.7 billion.
These figures are eyewatering, and it doesn’t take a seasoned economist (or even a “retail banking specialist”) to see that that this will have a profound impact on many businesses.
In Government, the Conservatives recognised that our high streets, which are going through a dramatic change, needed support. That’s why we cut business rates, saving an average shop £1,650, increased the frequency of business rate revaluations, meaning those businesses with falling property values would see their bills drop sooner, and prioritised investment into our high streets through our Levelling Up Funds and Future High Street funds – pumping £4.8 billion and £830 million respectively.
These new plans from Labour risk throwing all of that hard work away. John Lewis’ chief Nish Kankiwala has warned that these plans alongside the employers’ NI increases are a “two-handed grab” to UK businesses. Colliers have warned that the eroding of the rate relief will see “business rates bills actually rise by a massive 140 per cent next year”. And Savills’ head of rating David Parker said that “The need to assist smaller businesses is undoubtably acute” and the reduction of the rate relief will “disappoint many”.
And this is just the tip of the iceberg. High street businesses are being hit from all angles. The refusal of Government to fully compensate Councils for the financial impacts of the NI and NLW increases are putting further pressure on Council budgets, estimated to be over £1 billion according to analysis from the cross-party Local Government Association. Councils are already stretched financially, with limited means of raising additional funds.
The easiest way for them to balance the books? Increasing car park charges for Council owned car parks, which cover the significant majority of the town centre offer. In conversations I’ve been having in my role as Leader of Local Government for the Conservatives, almost every main Council I’ve spoken to have admitted to having to ratchet up these charges even further as part of the coming year’s budget setting. At precisely the time that we need to be finding ways to encourage shoppers to our high street shops, we’re making it more expensive for them to visit them.
It’s time for a concerted, wholistic vision for how we support our high streets through this period of change. No one denies that the future of our town centres will be different to the past. The rise and convenience of online shopping has forced a change in the offer. Visits to these places are now no longer about the bread-and-butter utility of day to day shopping, but now as much about experience, leisure and social interaction. Where’s the thinking happening of how we can foster and support that change? The very changes that could breathe new life into these vital areas and bring in new investment (and tax income) to boot.
Instead, once again, it seems that our hard-working high streets are being milked as limitless cash cows – with no thought at all as to their survival. And that’s immensely sad, as once the high street is gone, it’s gone. Pressure will pile on to convert empty shops and units into homes, which carry much higher property values. Town centres will lose their purpose and meaning.
The virtual high street may be cheaper, but the physical one has character and life. And unlike the digital world, once you turn it off, there’s no reboot button.